Hollande says French warship delivery will ‘depend on Russia’s attitude’

French President François Hollande on Monday said the decision on whether to deliver a second Mistral warship to Russia will “depend on Moscow’s attitude” over the Ukraine crisis amid mounting US-UK opposition to the deal.

Speaking to reporters during a dinner the night before EU foreign ministers were set to meet in Brussels to discuss tougher sanctions on Russia, Hollande said a first warship was nearly finished and would be delivered as planned in October.

"For the time being, a level of sanctions has not been decided on that would prevent this delivery," Hollande said.

"Does that mean that the rest of the contract - the second Mistral - can be carried through? That depends on Russia's attitude," Hollande added.

The EU has so far hit 72 Ukrainian and Russian figures with travel bans and asset freezes but there is reluctance to go further due to close economic ties between Russia and some EU member states, notably Germany and France. The current sanctions are referred to as “Phase 2” in diplomatic circles.

British Prime Minister David Cameron on Monday had called on the EU to adopt tougher "Phase 3" sanctions and to halt all arms sales to Russia, specifically citing the 1.1 billion-euro French contract for two warships.

But speaking to reporters on Monday, Hollande noted that, “The Russians have paid. Should we repay 1.1 billion euros if the boat was not delivered to the purchaser?” he asked. "The contract was signed in 2011, the boat is almost finished and should be delivered in October."

‘The Mistralisation of European policy’

Hollande’s comments came as Cameron said that fulfilling such an order would be "unthinkable" in Britain under the present circumstances.

“We need to put the pressure on [Russia] with all our partners to say that we cannot go on doing business as usual with a country when it is behaving this way,” said Cameron.

Earlier Monday, British Finance Minister George Osborne said the UK was prepared to take an economic hit from imposing further sanctions against Russia because the costs of not acting would be greater.

"Think of the economic hit ... of allowing international borders to be ignored, of allowing airlines to be shot down - that's a much greater economic hit for Britain and we're not prepared to allow that to happen," Osborne told BBC Radio.

A senior US administration official concurred with Cameron, re-stating the opposition US President Barack Obama voiced against the deal back in June because of Russia's support to Ukrainian separatists.

Lithuania's President Dalia Grybauskaite has also opposed the deal, warning that the EU was compromising its values to protect trade ties with Russia.

"We see the Mistralisation of European policy," said Grybauskaite. "Values and security are undermined for the sake of business, when 'buy and rule' is being applied" the president told public broadcaster LRT on Tuesday, suggesting Moscow is using its purchasing power to divide opinion within the EU.

"The sale of military technology to Russia under the current circumstances cannot be tolerated," said the outspoken Baltic leader, a former EU budget commissioner.